Allergan delivers 'decent' Q3 sales growth, with price hikes driving half of it

All eyes are on Allergan's ($AGN) friendly deal talks with Pfizer ($PFE), which is anxious to scoop up an acquisition and complete a tax inversion. But with the Irish drugmaker's execs mum on the possible combo Wednesday, the conversation turned to new product launches, drug pricing, and Q3 financials that looked "pretty good."

That's how Bernstein analyst Ronny Gal characterized them, anyway. After the H2 guidance the company put out in September, earnings per share--which topped expectations by 33 cents at $3.48--was "less critical," he wrote in a note to clients. "What we cared about was revenue and cash generation," and on revenue, Allergan's main products were "decent."

Those include Botox, which grew 13% year over year in constant currency, and eye drug Restasis, which turned in $328 million. Sales of Namenda XR, which launched shortly before predecessor Namenda lost patent protection, reached $214.5 million.

Allergan CEO Brent Saunders

And Allergan has a couple up-and-comers it expects to eventually join that group. For one, there's Namzaric, a combo Alzheimer's drug that pairs the active ingredient in Eisai's Aricept (donepezil) with Namenda's (memantine). While formulary coverage for the new med is "quite good right now," CEO Brent Saunders told investors, it'll expand even further in January "because of the Medicare Part D part of this equation"--and that's when the company is expecting big things from the newcomer.

It's also looking forward to rolling out Viberzi, an IBS-D drug commercial chief Bill Meury called the "perfect complement" to Allergan's constipation therapy Linzess.

The sales force for Viberzi will meet next week, Saunders said, noting that Allergan is "making a big investment in this launch."

Volume, though, is only driving about 50% of Allergan's revenue growth, Meury said on the call, with price accounting for the other 50%. Drug-price increases have come into the spotlight lately, with politicians targeting companies such as Turing Pharmaceuticals and Valeant Pharmaceuticals ($VRX) who have bought products and jacked up their stickers.

That's not Allergan's MO, Saunders reminded listeners. "Our business model does not involve purchasing products already in the marketplace and taking excessive price increases," he said, noting that Allergan would "continue to strike the appropriate balance between care and cost."

- read Allergan's release

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